By Shannon Craig and Alex Ubbink
‘It is a new day at the OFCCP’ was the message that permeated the National Industry Liaison Group (NILG) Conference in San Antonio earlier this month. With Acting Director Thomas Dowd opening and closing the conference as well as having all six OFCCP Regional Directors in attendance at the full conference, the OFCCP set a tone of listening and collaboration that we haven’t seen in years.
Conference attendees heard about new topics initiated by changes in our Federal government’s leadership, as well as some of the timeless regulatory requirements that all affirmative action employers need to live by. Here is a recap of key lessons from the conference:
1. The OFCCP is pursuing a balance of compliance evaluations and compliance assistance. The agency’s funding and staffing levels are insufficient to persuade contractors to comply by using traditional enforcement tactics (i.e. audits), so they need to rely on providing resources and incentives that encourage voluntary compliance. OFCCP is actively asking contractors to make suggestions for encouraging voluntary compliance. One example AD Dowd offered during the conference is that contractors might attend a training seminar offered by the OFCCP in exchange for a certificate of attendance that includes an exemption from being audited for 2-3 years. Three Town Hall meetings are scheduled for September in Washington DC, Chicago, and San Francisco to gather ideas from contractors. One thing AD Dowd wanted to make perfectly clear: you will not be audited for calling the OFCCP for advice or to share ideas, the audit list simply doesn’t work that way.
2. States and corporate stakeholders are taking on the pay equity issue following ineffective efforts at the Federal level. After eight years of trying to close the pay gap, the OFCCP collected less than $5 million in back pay due to wage disparities. The lack of progress has pushed states, large cities, and corporate stakeholders to create pay equity laws and reporting systems. New York, Massachusetts, California, and Maryland are just some of the states that have implemented laws addressing pay practices in different ways. Jackson Lewis’ Mickey Silberman has suggested this is a way to test which enforcement methods uncover pay disparities most effectively, potentially prompting more state and local laws in the future. While we may see the OFCCP ease off its focus on compensation audits, it’s still important to conduct proactive pay equity analyses to identify and resolve any problems before another governing agency finds them.
3. Prioritize issues revealed by your AAP results by level of risk to your organization. Begin by reviewing your AAP results as early in the AAP year as possible to ensure your company has enough time to address problem areas (underutilization, adverse impact, lack of progress on goals) and implement changes to current processes. Consider the risk associated with each problem area: What are the financial risks? What internal objectives has your company failed to achieve? Are there diversity and inclusion goals to consider? Could exposure in a compliance evaluation damage your reputation with stakeholders or prospective employees? Take each problem area one at a time. Assess the issue, conduct a fact-finding mission, communicate the issue and your findings to the essential audience, and act to resolve any discriminatory, incompliant, or ineffective practices.
4. Training your talent acquisition staff to use disposition codes is as important as creating disposition codes. Disposition codes are important – they help determine who is an applicant under the internet applicant definition and they help employers defend their selection decisions. Take this disposition as an example: Salary Expectations Inconsistent with Position. Would all of your recruiters use that the same way or properly? Do they understand that if an applicant says she needs $80,000 and your position only pays $55,000, that person doesn’t meet the internet application definition and can be removed from your applicants v. hires impact ratio analysis, but if that same applicant indicates she is currently making $80,000, she hasn’t said she needs more than $55,000 to take your position and consequently could meet the internet applicant definition? If she asked for $60,000 instead, would one of your recruiters use this disposition code, while another might call to ask the applicant if she could go as low as $55,000? Inconsistent use of disposition codes undermines your impact ratio analyses and leaves you exposed in the event of a lawsuit. Once you’ve designed the set of dispositions you want to make available to talent acquisition, train your team on what each disposition code means, the impact of each on your AAP analyses, and OFCCP restrictions on using particular dispositions (e.g. you can only use Did Not Return Calls if you’ve attempted to contact the applicant at least twice). Note that HR Works, Inc. can provide sample disposition codes and training upon request.
5. Disability self-identification rates are low nationwide, but deliberate efforts can increase responses. The average rate of self-identification of disability status is 3.2%. Ideas for raising the self-ID response rate include having service dogs train in the workplace; having company leaders talk openly about their own or a family member’s disability; bringing in well-known speakers who will communicate the importance of employing IWDs; observing Disability Awareness Month in October by having employees volunteer to use a wheelchair for the month and then talk about the experience; forming business resource groups (ERGs, affinity groups) that focus on disability in the workplace, have support from top management, and serve a business purpose; discussing the need for accommodations during the annual performance review process and training managers to properly handle disability disclosures; posting stories about veterans with service-related disabilities on the company’s intranet site; and building a WIIFM case for employees to self-identify, which may boil down to tapping employees’ desire for the company to do well in business and in the community. Don’t underestimate the importance of repetition when encouraging employees to self-identify.
6. The new EEO-1 Report requirement, adding W-2 wages and hours worked, is final. Or is it? Technically the new report has been finalized and approved by the Office of Management and Budget (OMB). However, OMB is reviewing a petition to block the report due to the administrative burden it places on employers, Congress is considering defunding the report in the EEOC’s FY18 budget, and commissioner vacancies at the EEOC mean the new leadership, when fully in place, can vote down the report. If the report proceeds as planned, the reports will be due by March 31, 2018. HR Works, Inc. offers an EEO-1 filing service and will keep you updated if any changes occur between now and the filing deadline. In the meantime, if you have 100 or more employees, determine whether you have appropriate systems in place to file the new EEO-1 Report. It is important to have a common employee identifier between systems that track workforce data (employee names, race/ethnicity, gender, location, title or EEO-1 job category) and systems that track W-2 wages and hours worked by payroll code. Consider your ability to separate hours worked from hours paid (can you distinguish between working hours and vacation, holiday, or sick pay?). Employers may report proxy data – 40 hours for full-time and 20 hours for part-time – for exempt employees whose time is not tracked for payroll purposes.
7. It’s important to prepare for a compensation interview. Most OFCCP audits now include a compensation interview in which the auditor collects information about the contractor’s pay practices, often to determine additional data factors to request and how to analyze each of them in a regression analysis. Contractors should proactively group similar positions for meaningful analysis, determine which factors influence pay and their order of importance, and regularly conduct internal pay analyses. Know before the interview if these internal analyses are considered privileged for your company. Submit clean compensation data with your initial audit submission, identifying and resolving data anomalies ahead of time. Make sure the person being interviewed can explain the company’s pay system so the auditor can understand it. Have a second person in the interview to take notes. When describing factors that influence pay, keep in mind that the more factors you identify, the larger your next data request will be. Provide readily available factors, like time in company or time in position, first. Expect the OFCCP to ask you to rank the factors by order of influence on salary. Decline ranking them if the request is overly broad or would have different answers depending on the position in question or type of pay (starting v. increase) being administered. If asked to sign the auditor’s interview notes, consider that the notes may legally bind you later and that there is no requirement to sign.
8. Be careful using social media in your recruitment process. It can be low cost, fast, and help you gain perspective on an applicant that you wouldn’t get from a résumé. Risks include uncovering unreliable or inaccurate information, obtaining information you legally cannot ask an applicant, and violating background check laws. If your organization chooses to use social media when recruiting, ensure there is a policy for doing so and communicate the policy to hiring managers and talent acquisition staff. Best practice is to wait until after the interview to conduct a social media search and to leave this screening to human resources or talent acquisition. Do not request usernames or passwords to applicants’ social media accounts. Retain the data you find – this information can change easily and quickly.
9. The foundation for making reasonable accommodations is a robust, interactive process.One out of every five American adults has a disability. Ensuring your company is prepared for accommodation requests will ensure equal employment and inclusion in the workplace. A request for an accommodation or recognition of an obvious barrier to someone with a known disability should prompt the interactive process. Don’t make assumptions about an employee with a disability, ensure the interactive process includes open communication, and don’t be afraid to ask the employee what accommodations have been helpful in the past. Implement a plan of action that will ensure employees with disabilities have the tools they need to perform their job duties.
10. The possible EEOC-OFCCP merger is controversial and unlikely to change affirmative action requirements. The idea of these two agencies merging has been around since the 1970’s, with mixed support. Financially, the OFCCP will struggle to be effective if it doesn’t merge with EEOC. The flip side is that recovering the small amount of budget money consumed by the OFCCP may not be worth the effort of the merger. Plus, few legislators are interested in having the closure of a “civil rights agency” on their political records. None of the experts speaking at the conference believe the affirmative action regulations will be overturned; the merger proposal instructs the agencies to figure out what needs to change in the regulations for the EEOC to take over enforcement of them. Labor Secretary Alexander Acosta told legislators that the merger would shift the location, not the mission, of the OFCCP. So don’t get rid of those self-identification forms or accommodation logs just yet.
It’s shaping up to be a year of change and transition for affirmative action employers. Next year’s NILG conference will take place July 31-August 3, 2018, in Anaheim, CA. To learn more about NILG or to find a chapter in your local area, visit http://www.nationalilg.org/.
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